Mumbai: The current rally in global stock markets might be the beginning of another bull rally and Indian stock valuations are looking attractive, a top executive of the world’s largest asset management company said.

Anthony Bolton, president of investments at Fidelity International, a subsidiary of Fidelity Investments, said: “I think I am looking at a bull market in its early stages even though others say it’s a bear market rally.”

“On a longer term, you’ll be better off in emerging markets because they’ll give you better growth,” Bolton, 59, said at a function here on Thursday to promote his book titled Investing against the tide: Lessons from a life running money.

Bolton managed some $11 billion (Rs54,450 crore) in Fidelity’s special situations fund in London till three years ago. He now mentors the institution’s money managers and analysts.

Bolton is the second well-known investment adviser after Mark Mobius of Templeton Asset Management Ltd to see the signs of a bull market in recent times. “We are building a base for the next bull market. You have to be careful not to miss the opportunity,” Mobius told Bloomberg on 23 March. Mobius helps oversee about $20 billion of emerging market assets as executive chairman at Templeton.

Tracking global markets, Indian markets have risen 34% since 9 March, the start of the current rally. The 30-stock Sensex, the bellwether equity index of the Bombay Stock Exchange, snapped an eight-day rally on Thursday to close 2.99% down at 10,947 points.

“Economic data is starting to look less bad and over the next few months we will see more of that information,” said Bolton. “We are going to see a slow pick-up in earnings. The upturn I am expecting is not fast.”

Analysts and fund managers are more optimistic about a rally in Indian stock markets as borrowing costs have come down for consumers and stimulus measures from the government and India’s central bank have brought down the cost of loans for companies.

Foreign institutional investors, the main driver of Indian markets, have pumped in some $1.2 billion in the past month after pulling out $13 billion in 2008.

A survey by the Netherlands-based ING Group showed Indian investors to be the most optimistic among 13 countries in the Asia-Pacific region including China. Their optimism index swung 75% upward over the last quarter.

Bolton said that he favours financial sector stocks to lead the rally. “Banks will lead us out of the crisis,” he said. “Financial sector stocks are a good bet because they are at the heart of the crisis and they led the market downfall. They are among the cheapest stocks and among the most underowned.”

A look at the price-earning (P-E) multiples of Indian banking stocks confirms Bolton’s views. The 18-stock Bankex index of BSE, an index of the banking industry, has a P-E of 8.73 compared with the 15.25 for the Sensex index. The P-E multiple of a stock is a measure of the price paid for a share relative to the annual net income or profit earned by the firm per share. A higher P-E multiple means investors are paying more for each unit of net income, so the stock is more expensive compared with one with a lower P-E multiple.

Bolton also predicted that the rally would continue and could see another big positive swing. “There is so much cash in the sidelines,” he said. “There will be another big move upwards as people who feel left out now will jump in.”